TRALAC - Trade Law Centre

Clothing and textile sectors cross swords over AGOA deadline

Monday, 13 January 2003

Source: Business Report

Durban - The clothing and textile industries are at loggerheads over whether the Africa Growth and Opportunity Act (AGOA) September 2004 deadline for least developed countries (LDCs) should be extended.

An extension would allow garment manufacturers to continue using fabric from countries outside sub-Saharan Africa, Walter Simeoni, the president of the South African Textile Federation, said at the weekend.

The issue will be hotly debated at the second annual Agoa meeting in Mauritius this week.

"It will be a tragedy if the US government succumbs to pressure to extend the deadline," Simeoni said. "This would discourage investment from foreign textile manufacturers, undermining US credibility and defeating the whole objective of Agoa."

The US government has not altered its official position on the deadline, but lobbying from LDCs and US businesses with vested interests in the Far East could persuade congress to change its mind.

Gordon Joffe, the chairman of the Clothing Trade Council (Clotrade), said representations from the LDCs, which faced "ghastly consequences" from job losses if foreign garment manufacturers pulled out, would decide which way the dice rolled.

"Clotrade considers itself a passive spectator, as the US will make a unilateral decision which is unlikely to be influenced by South African textile manufacturers and government representatives," he said

.

Simeoni disagreed. "South Africa and Mauritius have played a major role in the Agoa concept and the US textile industry is also against rolling over the deadline," he said.

Joffe said the local clothing industry faced competition from LDCs in the US as well as in the local market.

"However, we think the region would not be served in the long run by 'cutting off their water' before the local and regional textile capacity is actually in place," he said.

But Simeoni claimed that concerns that retaining the deadline would lead to insufficient textile capacity in sub-Saharan Africa were unfounded.

He admitted that the garment industry could experience some short-term hiccups, but said this would act as a major stimulus to encourage other countries to invest.

But Joffe said the clothing industry was losing out on Agoa's relatively short window period to enter the US market; it had only another year to establish South Africa as a supply country.

He recommended rolling over the deadline in smaller bites of about 18 months to solve the immediate problem of job losses and meeting orders while giving textile investors more time to set up operations.